Russian Court Orders BP to Pay $3 Billion in Damages to TNK-BP

A Russian court has ordered British supermajor BP to pay 100 billion rubles (approx. $3.1 billion) to TNK-BP after a failed deal with Russian oil company Rosneft.

The case was brought against BP by minority stakeholders in TNK-BP, a company in which BP currently holds a 50 per cent stake, when BP attempted to go into partnership with Rosneft last year. The court challenge, headed by Andrey Prokhorov, was brought due to what the minority shareholders felt was an attempt to exclude TNK-BP from the Rosneft deal. The minority shareholders alleged that TNK-BP had suffered financially from the exclusion and sought damages from the Russian court system.

This is the fourth time Mr. Prokhorov has brought a case about this issue to the Russian courts, having previously initiated a case for $16 billion damages in 2011, which was thrown out. He appealed that decision twice before taking this most recent case to the Tyumen arbitration court.

Speaking today after the ruling, BP said in a statement that it would be challenging the action and decision, saying the court case amounted to an "illegal corporate attack".

"We consider the court decision as unjustified," BP lawyer Konstantin Lukoyanov said after the case. "Today's ruling will be challenged in the court of appeal. All the plaintiff's arguments are based on absurd assumptions, and are not related to either the company's interests, or the interests of its shareholders."

He continued: "TNK-BP did not suffer and could not have suffered any damages; any arguments on the issue are pure speculation... The court award seriously damages the reputation of the Russian legal system and its ability to protect the rights of bona fide investors from illegal corporate attacks."

The decision is likely to further frustrate relations between BP and TNK-BP, as BP is planning to withdraw from TNK-BP as soon as possible. BP said last month that it was leaving the company, which it shares 50/50 with Alfa Access Renova (AAR), due to unsolicited interest in the company.

Partner AAR has said that it is interested in purchasing the stake from BP and has entered into a 90-day good faith agreement with BP to negotiate a sale, during which time BP may not complete a sale of the stake with any other company.

However, fresh tensions may be ignited as a result of today's court ruling as BP has also recently entered into talks with only one other company for the stake -- the company at the centre of today's court decision, Russian oil giant Rosneft.